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Credit deflation and the reflation cycle to come.


DurhamBorn

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Just now, Banned said:

Tell him to get nito pipeline welding pretty much all the current lot are 60 plus, he'll be on £600-700 a day in the coming years.Probably close to £500 now.

That's the plan :)

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3 hours ago, Solzhenitsyn said:

Interesting comment on the Twitters re credit availability/lending to House builders in the US...

 

Oh no, shock horror, that is so bad as if builders stop building prices will undoubtedly go up due to a shortage of supply. 

That is what the narrative isnt it.

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4 minutes ago, Option5 said:

That's the plan :)

Get him to contact National Grid to see what companies are doing the welding, i know Skanska do a lot of their work.

It is utterly crap work but do it for a few years get a bit of money and experience, then become a CSWIP welding inspector when he gets to the level of a senior welding inspector he'll earn 700 pound a day easily if he's willing to travel and live that kind of life. (which isnt easy)

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3 hours ago, Solzhenitsyn said:

Hi DB,

im really interested in the indicators you use. I’d like to learn more about this in general. I totally get that these are your indicators given to you by a friend and you don’t want to share the exact recipe, but if you could point me in the general direction of where I could start researching into these I would be really great full. 

Even just general how many indicators you use and what they generally approximate/track would be useful. What types of data feed into them and how much data is publicalky available vs how much would need to be purchased.

id really like to explore the macro picture and it’s usefulness as an accompaniment to my price charting.

cheers

For gold we use quite a bunch of indicators,

CCI (commodity sentiment index),this hit lowest numbers ever in gold,on GDX it hit minus 350,the lowest reading since GDX was started and lower than when the GDX fell from $53 to $15,and the numbers then saw GDX go up to $63

COTS data (commitment of traders),this hit lowest numbers ever in gold,(the insiders are less short than the dumb money ever)

Walter Bressart signals,this is flashing a turn in close

A GDX:Gold indicator (we like to see a parabolic divergence),this showed a very large divergence indeed

Hurst Cycles,this is wanting to pin the low as in and is showing GDX up to 24.5 by end of year (outlier is 30)

DSI (daily sentiment index),reached most bearish in history

RSI (relative strength index),reached lowest reading ever in gold,even lower than the parabolic fall in gold from 2012-2013

Moving averages.

We also cross our dollar calls onto gold and we also track the TIPS treasuries (they track inflation),

ALGO indicator (tracks momentum)

Iv never seen the numbers as extreme as im seeing now and they are pointing to a very strong bull market in the miners.They are a road map though,not a timing call.Timing is better done when the momentum changes and more miners move into positive technical charts (only 22% are bullish at the moment).

None of this work ensures certain calls,but it does take away the emotion out of a very dangerous sector and it does provide entry points when things are in favour.

Dollar we do a lot of flow work.Liquidity profiles of each central bank,counts from months above trend value,real inflation,and many more,.To be honest i rarely put the effort in to currency work simply as it takes a lot of work,and it doesnt really affect my investing.The reason i/we have put work in the last few years on it is because we are at a key inflection point where the dollar is pretty much running the way the cycle ends.

 

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Eventually Right
5 hours ago, DurhamBorn said:

I hear you on gold and the miners.Im starting to lean more towards a straight up into 2020 though i still see a risk of an up down up.There is plenty of time to work on that later.The road map point to a massive bull market in PMs and the miners though and iv never seen my indicators all in a line.Only the ALGO indicator that tracks momentum is in sell mode,but id expect that to turn last when the other indicators are flashing such huge buy signals as they are all contrarian based and are designed to move along the line depending on the scale of the bearish sentiment etc.

 

A guy I follow on twitter made a case for gold not plunging during a stock market crash in the last few days.  His rationale was that whereas in 2008 the large spec positions were long, and gold was in a bull market, at the moment specs are short, and gold seems to be in a bear market.

Therefore in 2008, when the spec longs had to close their positions to meet margin calls, they sold, and gold sank.  If the same were to happen today, the specs would have to close their short positions by buying, which would have a positive effect on the price of gold and the miners.

It makes rational sense to me, although I'd have no clue what the spec position on gold was in 2008, so couldn't confirm whether it was net long, and by how much.

It may just mean that the PM miners wouldn't get to quite so crazy a bargain price, compared to other sectors, in the event of a crash.

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UnconventionalWisdom
3 hours ago, Banned said:

Get him to contact National Grid to see what companies are doing the welding, i know Skanska do a lot of their work.

It is utterly crap work but do it for a few years get a bit of money and experience, then become a CSWIP welding inspector when he gets to the level of a senior welding inspector he'll earn 700 pound a day easily if he's willing to travel and live that kind of life. (which isnt easy)

Try and get overtime too. I once installed some camera equipment at a steel works, told the welders I needed another half an hour or so, they were like, "no worries, after 4 we get double pay". So they rock up an hour later, welded for 3 mins and went off saying they can charge for the hour. Fair play to them. 

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1 hour ago, Eventually Right said:

A guy I follow on twitter made a case for gold not plunging during a stock market crash in the last few days.  His rationale was that whereas in 2008 the large spec positions were long, and gold was in a bull market, at the moment specs are short, and gold seems to be in a bear market.

Therefore in 2008, when the spec longs had to close their positions to meet margin calls, they sold, and gold sank.  If the same were to happen today, the specs would have to close their short positions by buying, which would have a positive effect on the price of gold and the miners.

It makes rational sense to me, although I'd have no clue what the spec position on gold was in 2008, so couldn't confirm whether it was net long, and by how much.

It may just mean that the PM miners wouldn't get to quite so crazy a bargain price, compared to other sectors, in the event of a crash.

The commercials were net short 250k contracts at the start of the falls in 2008  and the dumb money was long by about 200k contracts,when gold turned up the commercials were only 80k short and the dumb money was only 80k long.The commercials are now less net short than anytime before,they are the insiders and are usually right.They hold some net shorts to cover the fact they hold a lot of gold.They are now holding the least insurance they ever have.Of course the dumb money could be right and the insiders wrong,but history says not.The fact all other indicators line up as well make the call even stronger.Getting their will be in waves,but i think the GDX is going to the $60 area perhaps by 2020.

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Solzhenitsyn
5 hours ago, Banned said:

Oh no, shock horror, that is so bad as if builders stop building prices will undoubtedly go up due to a shortage of supply. 

That is what the narrative isnt it.

Nope. Not the narrative at all. Narrative is that banks are starting to fear a top is in for house prices - so not willing to lend as much to developers. Particularly smaller ones less able to survive a fall.

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Solzhenitsyn
4 hours ago, DurhamBorn said:

For gold we use quite a bunch of indicators,

CCI (commodity sentiment index),this hit lowest numbers ever in gold,on GDX it hit minus 350,the lowest reading since GDX was started and lower than when the GDX fell from $53 to $15,and the numbers then saw GDX go up to $63

COTS data (commitment of traders),this hit lowest numbers ever in gold,(the insiders are less short than the dumb money ever)

Walter Bressart signals,this is flashing a turn in close

A GDX:Gold indicator (we like to see a parabolic divergence),this showed a very large divergence indeed

Hurst Cycles,this is wanting to pin the low as in and is showing GDX up to 24.5 by end of year (outlier is 30)

DSI (daily sentiment index),reached most bearish in history

RSI (relative strength index),reached lowest reading ever in gold,even lower than the parabolic fall in gold from 2012-2013

Moving averages.

We also cross our dollar calls onto gold and we also track the TIPS treasuries (they track inflation),

ALGO indicator (tracks momentum)

Iv never seen the numbers as extreme as im seeing now and they are pointing to a very strong bull market in the miners.They are a road map though,not a timing call.Timing is better done when the momentum changes and more miners move into positive technical charts (only 22% are bullish at the moment).

None of this work ensures certain calls,but it does take away the emotion out of a very dangerous sector and it does provide entry points when things are in favour.

Dollar we do a lot of flow work.Liquidity profiles of each central bank,counts from months above trend value,real inflation,and many more,.To be honest i rarely put the effort in to currency work simply as it takes a lot of work,and it doesnt really affect my investing.The reason i/we have put work in the last few years on it is because we are at a key inflection point where the dollar is pretty much running the way the cycle ends.

 

Thank you very much, just going to put a brew on and do some reading up on your post.

very much appreciate you sharing DB 

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1 minute ago, Solzhenitsyn said:

Nope. Not the narrative at all. Narrative is that banks are starting to fear a top is in for house prices - so not willing to lend as much to developers. Particularly smaller ones less able to survive a fall.

The govt/MSM narrative is prices rise when building slows (lack of supply). Of course if building slows and prices fall  it'll show this claim to be utter bollocks.

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2 hours ago, Banned said:

The govt/MSM narrative is prices rise when building slows (lack of supply). Of course if building slows and prices fall  it'll show this claim to be utter bollocks.

The MSM bollocks that annoys me is that whenever they talk about house price falls, some twat pops up and states if you don’t own a house you won’t get a mortgage. Which is fair enough if your talking to some one young with limited savings. That was me in 2009-11. However, they then double down and state how high house prices are a good thing if you need a small deposit mortgage. For real?

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sancho panza

 

On 30/08/2018 at 18:48, Cattle Prod said:

Oil
After the GFC, I liked commodities so much I went back to college, requalified and joined the oil industry (subsurface). I've since learned alot about supply and demand, the bullshit that is reported, and what actually drives the price. My expertise is obviously on the supply side, and I made alot of money buying futures last summer (now mostly out as we are consolidating) as I saw a clear mispricing given supply constraints. The key piece of insight I can bring to the forum is about supply, as thats my job. 

 


I don't recommend investing in oil companies or futures markets. Some will do as well as the miners, and I expect oil itself over 200 dollars in the next 3 years. But it will cycle unpredicably because the world needs it but can't afford it (even at current prices). Demand destruction will be met by supply shortages. The impact will be far reaching. Buy potash. I don't bring up oil here for investmemt reasons, but because what happens to oil will influence, directly, every other sector. If any elements of this thesis are of interest, please just ask. There is too much detail to go into now, this is long enough!


To lastly add, this week, a long time hero of mine, Jim Rogers, mentioned oil in dispatches. Can't remember the last time he mentioned it, he is smelling it too...
https://moneyweek.com/493654/jim-rogers-buy-gold/
CP

'For example, the real capitulation in gold came after Lehmans in Septemeber 2008, and hit bottom about a month later (after the US announced TARP and the UK public infrastructure spending...sound familiar?!). I don't think that will happen again, so I don't think the PMs will be hit as hard. Someone mentioned this week that PMs will only get caught in a risk off sell everything event if the longs holding them have to sell.''

The only thing that's held me back putting more into PM's is experience of previous sell off where that which remains liquid is used to cover the losses on that which illiquid.

 

 

'Shale is a glorified ponzi, and I think is now turning, and when Wall street realises, I think all hell will break loose.'

Can you expand on that in laymans terms please?

 

'I don't recommend investing in oil companies or futures markets. Some will do as well as the miners, and I expect oil itself over 200 dollars in the next 3 years.'

What drives that prediction ?Demand up via the futures market or lack of supply?Paul Hodges( always worth a read ) has written extensively on the role of the futures marlket in driving oil prices post 08.Is that something you'd agree with?

https://www.icis.com/blogs/chemicals-and-the-economy/2018/05/oil-prices-flag-recession-risk-as-geo-political-tensions-rise-over-iran/

'So why, you might ask, has the oil price rocketed from $27/bbl in January 2016 to $45/bbl in June last year and $78/bbl last Friday?  Its a good question, as there have been no physical shortages reported anywhere in the world to cause prices to nearly treble.  The answer lies in the second chart from John Kemp at Reuters:

  • It shows combined speculative purchases in futures markets by hedge funds since 2013
  • These hit a low of around 200mbbls in January 2016 (2 days supply)
  • They then more than trebled to around 700mbbls by December 2016 (7 days supply)
  • After halving to around 400mbbls in June 2017, they have now trebled to 1.4mbbls today (14 days supply)

Speculative buying, by definition, isn’t connected with the physical market, as OPEC’s Secretary General noted after meeting the major funds recently:  “Several of them had little or no experience or even a basic understanding of how the physical market works.”

 

 

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sancho panza
18 hours ago, azzuri82 said:

Thorium is an interesting one, it's said there's 13 times the amount of energy in coal in the form of thorium than just burning the coal itself.

The USA trialled thorium electrical power in the 60s, it's safer, cheaper and more reliable than other forms of nuclear power, but it was ignored with uranium and plutonium chosen instead going forward as they could both be used for nuclear weapons, whereas thorium  cannot.

Thorium is intrinsically much safer, since there's no core involved to go into meltdown a La Fukushima, it doesn't operate under high pressure, and in the event power is lost, the working liquid simply cools and turns to a solid. Theoretically, you could quite literally turn such a power plant "off" and and leave it unmanned.

The technology exists, is proven but there's currently no political will for it to happen.

Fascinating to see the learned posts on this.

18 hours ago, azzuri82 said:

For anyone that's interested, Sasol in South Africa have perfected the process:

"Coal-to-liquid (CTL) technology makes economic sense only in a world of high oil prices: synthetic fuels become economically viable when oil prices reach $50 a barrel. As a result, Sasol has come of age. Until 2003, oil prices averaged $25 a barrel, making $45-a-barrel liquid coal economically prohibitive, but today oil prices hover at $70-a barrel, so the demand for CTL technology is booming.

The CTL technology dates back to the 1920s, when two German chemists, Franz Fischer and Hans Tropsch, developed a process to convert coal into a gas and then used it to make synthetic fuels. During the Nazi reign, the "Fischer-Tropsch method" was employed in the war effort, as Germany lacked access to sufficient crude oil. International oil companies also experimented with the process, but put it aside because oil was cheaper.

Sasol - prompted by South Africa's apartheid-era isolation, as well as the poor quality of its coal- perfected this technology at its first plant in Sasolburg back in 1955. When oil prices soared in the 1970s, Sasol built two more plants in Secunda with a $6-billion government loan. The company was privatised and was listed on the Johannesburg Stock Exchange in 1979, but the government maintains a 23.5% stake.

This heavy subsidisation pattern continues, with this expensive technology requiring similar incentives and loan guarantees elsewhere - resulting in engineers shunning CTL for a long time. But with the world approaching energy peak, CTL technology is gaining favour."


Read more: http://www.mediaclubsouthafrica.com/tech/38-tech/innovation-bg/123-liquid-fuel-from-coal#ixzz5Piu5Cv36

 

15 hours ago, Barnsey said:

Apologies interrupting the genuinely insightful discussion on energy, just wanted to quickly highlight that UK house prices have just experienced their biggest monthly fall since July 2012

https://www.nationwide.co.uk/about/house-price-index/headlines

I've been short a few UK builders for a month or two.Just did my daily search on RM-24hrs,Leics>550k and out of 24 about 505 have significant reductions.We're early on in this downturn but some of the more moneyed players appear to be cashing in.

15 hours ago, Cattle Prod said:

Sorry if its diverted the thread! I hope my purchase contributed to that number. I think the housing market turned 6-8 months ago. Thats about the same lag time I saw in Ireland between the first negotiations downward, and wider reporting of it. The peak never feels like a peak at the time, its in your rear view mirror

I've leaarned loads.I agree on the housing market.LCP/LSL acadata had the turn around then.

14 hours ago, Solzhenitsyn said:

Yep, second only to Yet-to-Find numbers. I also work in O&G, subsurface (exploration).

currently working the North Sea. U.K. 

The OGA regularly release estimates of billions of barrels YTF potential for the North Sea, what they don’t consider is that much of it is in tiny accumulations.

same for the undeveloped discoveries...who on earth is going to develop a 12mmboe HPHT condensate discovery ?!? 

Still money to be made in the North Sea for small focussed explorers, but I just don’t see the growth potential for the majors. 

$200 oil might help recover some of the small stuff I suppose, assuming finding costs & capex/opex don’t similarly inflate!

 

rig rates still nice and low however, we currently have a semi-sub on contract for $100k per day. That’s less than 1/3 of the cost compared to just a few years ago ;) 

'who on earth is going to develop a 12mmboe HPHT condensate discovery ?!?'

 

No idea...even what it means.

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@sancho panzaShale is a glorified ponzi, and I think is now turning, and when Wall street realises, I think all hell will break loose.'

Can you expand on that in laymans terms please?

I'm by no means an expert but I thoroughly enjoy learning from all of you (thank you!) and i'll share information when I can. I regularly follow 'Steve St Angelo' of the SRSrocco report. He explains the 'shale ponzi' in this detailed 25 minute video. I'm no economist or oil expert, but I can't see any holes in his arguments. The gist being that most shale companies are throwing mountains of cheap currency/debt just to keep up production levels. However, the decline rates are so high that they require ever more capex just to tread water. If/when currency becomes more expensive to borrow, or the decline rates become too severe production would drop off a cliff and it's game over. 

https://srsroccoreport.com/the-shale-oil-ponzi-scheme-explained-how-lousy-shale-economics-will-pull-down-the-u-s-economy/

 

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9 hours ago, Cattle Prod said:

Here to learn? So am I. We have lots of long meetings in the oil industry (Solz, you know what I mean?!); when someone says "I don't know", I sit up and start to listen...

Null, I'm as cynical as the next guy. But I can tell you with certainty that there is no listed oil company in the world can afford to withold production. Its the opposite. We sink enormous capital, we take the cash coming back, and no political situation will alter that. Example: I can tell you for a fact we 'blew down' one of our reservoirs 2014-2016. We opened the spigot, rising coning and other damage, because we needed the cash. Its counterintuitive. But oil companies try to produce as much as they can at bad times, because they need the cash. And the very few, who can afford to husband their resource in good times, like Saudi Aramco, will protect their reservoirs. Most of us are producing balls out. Time value of money, etc.

Tax breaks and production? It's hard to keep up. And believe it or not, Pakistan is far more fiscally stable than the UK. But there is a long lag time in O&G. 2012 was good times. Uk production dropped faster than Norway because its about 10 years older, mainly. And doesn't incentivise exploration. The production lift we currently have is because of investment 5 years ago. In 5 years time? There will be no uptick. 

Thanks, that's great to get an inside view on the situation, I see things differently now.

The investment from 5 years ago, was that around the time when the government commissioned a report on how to increase production from the North Sea? I can't remember who it was who did but recall the outcome was to basically get the different companies to collaborate more. I assume increasing production will eventually lead to a faster and more sudden decline in production.

From what you say, oil companies are heavily dependant on low interest rates and cheap money (like so many others), how much of the spend is on operations vs R&D and investment in better equipment (as apposed to more equipment)?

Around ten years ago the peak oil movement seemed to be quite popular and in recent years seems to have died off somewhat. I wonder if they were ten years early. It does seem that its the American shale that is propping up global production levels, a sudden drop in that output could make for interesting times.

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sleepwello'nights
On ‎30‎/‎08‎/‎2018 at 16:09, DoINeedOne said:

 

Also Vodafone still dropping I see using @DurhamBorn  method of buying at 8% drops looks like I shall be buying some more Vodafone

 

I did warn that their share price was bound to drop because I bought some.

What puzzles me is which influential stock market intelligence outfit bothers to look at my trades?

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12 hours ago, Castlevania said:

The MSM bollocks that annoys me is that whenever they talk about house price falls, some twat pops up and states if you don’t own a house you won’t get a mortgage. Which is fair enough if your talking to some one young with limited savings. That was me in 2009-11. However, they then double down and state how high house prices are a good thing if you need a small deposit mortgage. For real?

From what im seeing in the macro picture i dont think il ever see these prices in houses again in my lifetime (southern/boom areas).Inflation adjusted,or maybe even nominal.The new build estates have been pumped on HTB and flogging 20% to corrupt social housing providers.Those people buying those are making a life changing mistake.I have friends whos daughters/sons have or are buying through HTB and it pains me,but i cant say anything because housing is a very emotional business and it might come across as finger wagging.

 

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10 minutes ago, Cattle Prod said:

The investment was from when the industry was making pots of money up to 2015. Investment decisions were taken that are giving a fillip to production now. The govt does a pretty good job of trying to get us to collaborate and get more out, but as I keep saying we won't spend money on uncommercial projects. And the North Sea is following natural laws of decline. It'll continue declining, with a downtick coming from the lack of investment over the last 3 years.

Peak oil? As I said, much of the production plateau has been masked by shale and oil sand as the graph shows. What would have happened without that? They should have called it peak conventional (regular, flows easily) oil.

I think you can also see on that graph the rest of the world opening the spigots as prices crashed, to try and get cash in the door. I hope they didnt damage their reservoirs too badly (Mexico did)!

 

Screenshot_20180901-091357_Twitter.jpg

Thanks for another really informative post and taking the time to answer questions.

So shale production in the US really is critical and a drop in output could have a major impact on the oil price?

Can I also ask, how does increasing production damage a reservoir? Is this to do with when seawater is pumped in?

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sleepwello'nights
1 hour ago, DurhamBorn said:

From what im seeing in the macro picture i dont think il ever see these prices in houses again in my lifetime (southern/boom areas).Inflation adjusted,or maybe even nominal.The new build estates have been pumped on HTB and flogging 20% to corrupt social housing providers.Those people buying those are making a life changing mistake.I have friends whos daughters/sons have or are buying through HTB and it pains me,

 

Whilst I don't have enough knowledge or understanding of economic cycles and investment strategies to disagree with your analysis I cant help but wonder if your predictions will come about. I've followed numerous threads on TOS about the economy yet the doomsayers forecasts haven't come about.

In particular the handling of the US economy has changed under Trump. I watched the discussion posted on Thursday? in this thread with the economist worrying about US debt levels. With the US economy generating more employment will this mean that even with interest increases borrowers will still be able to service their debt. The debt burden will only become a crisis when unemployment rises and borrowers have to default. 

Most posters on here are debt averse and I wonder if that causes strong confirmation bias on how the economy will play out? 

I've just read the post above about Italy's infrastructure crumbling. Isn't that a golden opportunity for Keynsian economics to fill the hole caused by a reduction in consumer spending.  Better to rebuild some bridges than pay to have holes dug and filled in.

 

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Gordie Lastchance
On 30/08/2018 at 22:12, Cattle Prod said:

Also, the '200' years of coal needs to be viewed with the same lens as Permian oil: it's mostly poor quality lignite and expensive/sub economic 

Hi CP, I'm really enjoying your posts - which I can honestly say is the same for every single other poster on this thread. Lots of really good discussion, plenty to think about and it's a thread which involves folk who are prepared to pitch in and share whatever help or expertise they have for the good of others. What's not to like?

I'm quite interested in the coal issue that's been mentioned variously. I remember reading quite a bit about the tussle over Cluff Natural Resources bidding to extract gas from coal seams under the Forth in Scotland - underground coal gasification (UCG) to give it its fancy name. At the time, about 2014/2015, I read it simply as a news story, rather than from an investment perspective. Anyhow, the firm has since abandoned its plans for UCG under the Forth because of a lack of support and owing to opposition.

Cluff Natural Resources (Aim-listed and a penny share) has Algy Cluff as chairman, although he's recently stepped down as CEO. He's described as an oil industry veteran - and also has been involved in mining precious stuff. He's also described as a pioneer, certainly from his days at the birth of the North Sea oil boom.

So, here's my question: Was he too pioneering when it came to the coal-to-gas scheme? Ahead of his time? He's publicly voiced his worries about the UK's poor energy security - some say he would do, to give his own scheme some leverage. Do you think UCG might have its day, or is coal dead in all its forms?

 

  

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4 minutes ago, sleepwello'nights said:

Whilst I don't have enough knowledge or understanding of economic cycles and investment strategies to disagree with your analysis I cant help but wonder if your predictions will come about. I've followed numerous threads on TOS about the economy yet the doomsayers forecasts haven't come about.

In particular the handling of the US economy has changed under Trump. I watched the discussion posted on Thursday? in this thread with the economist worrying about US debt levels. With the US economy generating more employment will this mean that even with interest increases borrowers will still be able to service their debt. The debt burden will only become a crisis when unemployment rises and borrowers have to default. 

Most posters on here are debt averse and I wonder if that causes strong confirmation bias on how the economy will play out? 

 

I have the same thoughts, I think its likely to happen (but not 100% certain to) but the big question is when, next week, next year or next decade?

It's like a journey where we know the destination but have no idea of how far away it is. I don't think there are any markers that show where we are, just metrics that indicate the direction of travel.

This is why I have an interest in the fundamentals like oil and energy, the things on which the entire modern civilisation are totally dependant.

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Gordie Lastchance
20 minutes ago, Cattle Prod said:

Hi, thanks, yes I know Cluff (the company). UCG is tinkering around the edges IMO. It is a marginal, poor quality gas resource. By contrast, there is in a single field an ocean of natural gas in the Pars Dome (Qatar and Iran) 20 times the size of all the gas ever extracted in the North Sea. It just needs transport.

Cluff has assets in the southern north sea potentially bigger than any onshore UK resource. They just need infrastructure (hello, government)

As an aside, I bet there will never be shale gas/oil/fraccing in the UK (edit to say onshore. Little known fact is that offshore UK wells have been routinely fracced for decades. Its not new, and not a big deal) It's a large industrial operation. Ive been to the fields in N Dakota and you see nothing for miles, but an odd cow. Won't work here. Similarly coal bed methane has been done in Australia on an industrial scale. I don't know if its making any money.

 

 

Great to hear your take on it. Thank you.

Back when I joined this thread, I admitted to my poor share buying exploits in the past - and the ones which got away. One of the most recent ones that "got away" was an oil company. That was Hurricane (west of Shetland). Saw its turbulent share price when it was 24 pence, around about November. Was so tempted, but had put money into Desire (Falklands, bad move) many, many moons ago and got the jitters, so didn't. I mentioned on here how Hurricane's share price has since doubled.

I've read about Cluff's licenses for the Southern North Sea - do you think they're a goer? With rig rates, like you say, pretty low, now seems a good time to start boring some holes.

 

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Gordie Lastchance
On 30/08/2018 at 20:49, Cattle Prod said:

I don't know much about the wholesale price of gas, but the supply of it in the UK is another hobbyhorse of mine. Supply/demand is on a knife edge, especically since Rough was shut. I think one of the first infrastructure spends will be Rough mk 2, hopefully by Centrica again. The other element is the UK is no longer and never will be self sufficient in gas. There is no shortage of gas in the world, but it us not yet a true commodity, with huge variance in pricing. That maybe what you're seeing in wholesale prices.

 

This also jumped out at me. Late last December, we had a gas engineer (domestic/boiler) at the house. Interesting guy. Said how Britain had been hours away from running out of gas that month. I can't remember what was going on at the time to put supplies on such a critical footing, but mention was made of not having storage in the country with Rough being closed. Durhamborn has spoken often about infrastructure being at the leading edge of investment when the turn comes - so I wonder if gas storage will be at the head of the list, especially if we get a cold winter and people talking about it this year?

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1 hour ago, sleepwello'nights said:

Whilst I don't have enough knowledge or understanding of economic cycles and investment strategies to disagree with your analysis I cant help but wonder if your predictions will come about. I've followed numerous threads on TOS about the economy yet the doomsayers forecasts haven't come about.

In particular the handling of the US economy has changed under Trump. I watched the discussion posted on Thursday? in this thread with the economist worrying about US debt levels. With the US economy generating more employment will this mean that even with interest increases borrowers will still be able to service their debt. The debt burden will only become a crisis when unemployment rises and borrowers have to default. 

Most posters on here are debt averse and I wonder if that causes strong confirmation bias on how the economy will play out? 

I've just read the post above about Italy's infrastructure crumbling. Isn't that a golden opportunity for Keynsian economics to fill the hole caused by a reduction in consumer spending.  Better to rebuild some bridges than pay to have holes dug and filled in.

 

im afraid this is it with the naysayers, ive been reading zero hedge for years, its real doom porn, and as such its huge flags to failure are like reading the daily mail, just a bit of a laugh. It cries wolf, but when it finally happens, because of all the wolf crying, it will be completely missed.

Also with italy, are they the trigger to start the big infrastructure spending reflation? You know how other goverments just blindly follow each other rather than waiting to see the results of the others doing it.

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